A leading master limited partnership (MLP), Energy Transfer Partners L.P. (ETP) recently announced the pricing of a public offering of 12,000,000 common units. The partnership also offered a 30-day option to the underwriters to purchase 1,800,000 additional units. The units were priced at $48.05 a piece.
Energy Transfer intends to use the entire proceeds to pay off the outstanding balance under its credit facility and other partnership purposes. The partnership expects the proceedings to be over on Apr 10, 2013.
Energy Transfer ended fourth quarter 2012 with long-term debt (less current maturities) of $15,442 million. Debt-to-capitalization ratio was 47.1%.
The partnership currently retains a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next 1 to 3 months.
In Oct 2012, Energy Transfer acquired Philadelphia-based refining and petroleum product marketing company Sunoco Inc. for $5.3 billion. With this transaction, Energy Transfer has also become the General Partner and the owner of a 32.4% interest in Sunoco Logistics Partners L.P. (SXL), an MLP that operates substantial refined product and crude oil pipeline and terminal assets.
We believe Energy Transfer is well positioned to compete in the natural gas midstream, and transportation & storage businesses with its geographically dispersed asset mix. The partnership has a significant market presence in each of its operating areas, which are located in the major natural gas-producing regions of the U.S.
However, MLPs typically depend on equity and debt markets for growth finance. Market turmoil resulting from issues such as the recent subprime crisis, which hinders access to debt/equity markets, will impact MLP growth prospects.
Meanwhile, there are other pipeline operators that offer more value and are worth buying now. These include Delek Logistics Partners L.P. (DKL) and Summit Midstream Partners L.P. (SMLP). Both these firms sport a Zacks Rank #2 (Buy).
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